Sears Holdings in the black again

Hoffman Estate, Ill. — A one-time gain of $2.7 billion from the creation of its publicly-traded Seritage Growth Properties real estate investment trust (REIT) pushed Kmart's parent company, Sears Holdings, into the black for the first time since 2012. Sears reported net income of $208 million in the second quarter of fiscal 2015, compared to a net loss of $573 million the same period the prior fiscal year.

Sears sold 235 stores and its 50% interest in joint ventures with three mall operators to create the REIT. Net sales did not fare so well, falling 22% to $6.21 billion from $8 billion. The decrease in revenue included a decrease of $780 million associated with Sears Canada, which was de-consolidated in October 2014, and $386 million as a result of fewer Kmart and Sears full-line stores. Same-store sales declines also were a major factor.

Kmart and Sears domestic same-store sales declined 7.3% and 14%, respectively, for a total 10.8% decline across the company. This decline was driven in part by highly targeted promotional and marketing spend. Sears and Kmart also shifted away from low-margin categories, such as consumer electronics.

"The second quarter marked our fourth consecutive quarter of improved results,” said Edward S. Lampert, chairman and CEO of Sears. “During the quarter we completed many of the objectives we laid out to transform Holdings from a traditional, store-network based retail business model to a more asset-light, member-centric integrated retailer leveraging our Shop Your Way platform. The successful completion of these actions has positioned Sears Holdings for long-term success and is consistent with our strategy to focus on our best stores, reward our best members and pursue our best categories as part of our transformation.”